It was a wonderful vision while it lasted, the trust that the Fed may cut rates a half-point this fortnight, bringing down interest rates on cars, homes, and credit cards — and maybe even bringing some private-sector work growth up to the economy.
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Alas. That no more looks so good.
Early on Wednesday, the Bureau of Labor Statistics ( BLS ) announced that the core consumer price index ( CPI), which excludes more volatile food and energy costs, increased by 0.3 % from July. That’s the most in four months and up 3.2 % from a year ago. Cover costs, which include foreclosures and revenues, were” the principal factor” in July’s boost, according to BLS.  ,
Since mortgage rates typically change slowly and homes ( or apartment moves ) are n’t typically purchases, housing costs are always a lagging economic indicator. What those costs indicate about today’s news is that Bidenflation has n’t yet been resolved.  ,
When Wall Street and everyone else were hoping for a half-point price cut when the inflation report from July came out in early August, somewhat under expectations. With this August review, we may consider ourselves fortunate to get a quarter-point fair of pleasure.
Zero Hedge reminds us that” That was the 51st straight month of]month-over-month ] increases in Core CPI and a new record high”.
When a company makes poor decisions, red paint tends to provide a remedial effect. When the government makes poor decisions, it frequently flies more of its own money at the problem to calm down vested interests who are n’t prepared to let their gravy train sag. The Inflation Reduction Act, Infrastructure Act, and American Recovery Act, which are the three major spending/regulatory costs, created a sauce coach feeding frenzy and a terrible regulatory burden on the successful remnant of the private market.
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The inflation reduction we’ve experienced over the past year or so is just partially attributable to the high interest rates that have hampered the creation of private sector jobs and disrupted the housing industry. Much of the cheers is due to Beijing’s incredible mismanagement of China’s economy.
” What, wut”? I nearly hear you asking.
Communist China has a major problem with recession, which is an even more stubborn difficulty than prices. Beijing is attempting to boost the Chinese market by flooding domestic markets with cheap imports. To prevent a negative spiral reminiscent of Japan’s of the 1990s, they must do that to maintain the factories running and people working hard.
Currently, China’s most important export is n’t cheap consumer goods, it’s disinflation. That’s helping to keep a cap on Bidenlfation…  ,
… but China ca n’t export suburban homes, city condos, or apartment buildings. The rates on those also reflect the incredible incompetence we’ve witnessed here at home for the past four years.
Recommended:  , Biden Admin to SpaceX: Drop Dead!
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